The Great Wealth Transfer: Reshaping Retail Trading and Investing

1st Feb, 2024

6 min read

GTN - Generational wealth transfer for Web

By Eric Krueger, Chief Executive Officer of GTN Americas

Across the globe, a colossal financial shift is brewing – the Great Wealth Transfer. As baby boomers approach retirement and beyond, an estimated $72.6 trillion in assets is projected to flow to younger generations by 2045. This event has the potential to redefine the landscape of retail trading and investing, ushering in new players, preferences, and priorities. 

So, how will these new investors trade and invest differently? 

Mobile-First Mindset: Unlike their predecessors, Gen Z and millennials are digital natives. They’re accustomed to seamless mobile experiences, and their financial lives will be no different. Trading platforms and investment apps need to prioritise intuitive interfaces, sleek design, and lightning-fast mobile functionality to capture and keep their attention.  


Fees Matter: Value-conscious and accustomed to transparent pricing models, the younger generation expects competitive fees and low barriers to entry. This doesn’t just mean free trades, but also transparent fee structures for more complex investment strategies. 


Trading Education Reigns: Financial literacy can be a hurdle for younger investors. Platforms that prioritise in-app learning modules, gamified simulations, and personalised tutorials will likely gain traction, encouraging them to enter the market with confidence. 


Rise of the Robo-Revolution: Automation and AI-powered solutions resonate with a tech-savvy generation. Robo-advisors that offer automated portfolio management and personalised investment strategies at lower costs could become increasingly popular, catering to those seeking a more hands-off approach to wealth building. 


Fractional Shares: Democratising Access and Diversification: Fractional shares are reshaping the investment landscape, democratising access to previously out-of-reach stocks and fostering broader diversification for retail investors. This innovation enables ownership of “slivers” of expensive blue chips, opening doors that were once locked by high share prices. 

No longer bound by whole-share minimums, investors can now: 

  • Own prestigious names: A slice of a high-price tech stock becomes attainable, alongside other historically off-limits companies. 
  • Spread risk across a wider universe: Diversification is enhanced, mitigating risk and tailoring portfolios to individual goals. 
  • Invest with greater precision: Exact amounts can be allocated, maximising flexibility and control. 

Traditional institutions face a choice: adapt or risk irrelevance. Collaboration with innovative FinTechs, through white-labeling or API integration, offers a pathway to embrace fractionalisation and stay relevant to younger generations. 

Fractional shares are not a fad, but a fundamental shift already expanding beyond stocks. With rising interest rates, bonds are becoming increasingly attractive targets for fractionalised investment. This is just the beginning of a transformative wave in retail trading. 


Social Trading’s Influence: Millennials and Gen Z are heavy users of social media, and these habits could extend to their trading and investing. Peer-to-peer learning and social validation play a significant role in their decision-making. Platforms that enable social trading features, connecting users to share insights, discuss strategies, and learn from each other’s experiences, could offer a unique advantage and gain market share. Examples include features like public watchlists, copy trading functionalities, and social media integrations. 


Beyond the New Guard: It’s not all about upstarts and disruption. Established financial institutions have a wealth of experience and brand recognition, which is invaluable. To remain relevant, they must adapt to changing user preferences. This means prioritising ongoing platform and mobile experience enhancements, developing engaging educational tools, and continuing to innovate around their product offering and competitive fee structures. 


A Landscape in Flux: The Great Wealth Transfer is not a singular event; it’s a long-term transformation. As new generations enter the market, their preferences will continue to evolve, shaping the future of retail trading and investing. The most successful players will be those who adapt, innovate, and prioritise user experience, regardless of their legacy or origin. 

Ultimately, the Great Wealth Transfer represents an exciting opportunity for everyone. By understanding the preferences and priorities of the new investor, all players – fintech newcomers and established institutions alike – can position themselves to thrive in this dynamic and evolving landscape.